Furniture Retailer Lovesac Ends Best Buy Partnership, Issues Weak Forecast

The Lovesac Company LOVE shares are trading lower on Thursday after reporting first-quarter results.

The furniture retailer reported a loss of 73 cents per share, beating the Street view of 83 cents loss.

Quarterly sales of $138.37 million (+4.3% year over year) outpaced the analyst consensus estimate of $137 million. This growth was primarily driven by an 18.2% increase in showroom sales, offsetting an 8.9% decline in internet sales.

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Gross profit increased 3.2% year over year to $74.4 million. Gross margin declined by 60 basis points to 53.7% of net sales in first quarter of fiscal year 2026, compared to 54.3% in the same period last year.

The drop was mainly due to a 230-basis-point decrease in product margin from increased promotional discounting, partially offset by lower inbound and outbound logistics costs.

The cash and equivalents balance as of May 4, was $26.9 million as compared to $72.4 million as of May 5, 2024.

Total merchandise inventory was $124.9 million as of May 4, 2025 as compared to $94.7 million as of May 5, 2024 primarily related to a planned stock inventory increase of $25.9 million coupled with an increase in freight capitalization of $5.1 million.

The company opened 11 new showrooms and closed 1, resulting in a total of 267 showrooms as of May 4, 2025.

The company also announced it has discontinued its partnership with Best Buy Co., Inc. BBY and plans to wind down the Best Buy shop-in-shop locations by the third quarter of fiscal 2026, aligning with its strategic initiative to accelerate its physical and ecommerce presence.

The company stated that broad macroeconomic challenges, such as inflation, high interest rates, increased tariff and trade restrictions, and a weak housing market, are negatively impacting its business. These factors have led to a slowdown in consumer demand for its products, a trend that the company warns may continue.

Lovesac expects second-quarter GAAP EPS loss between 83 cents and 58 cents, higher than the 26 cents loss estimate. Revenue guidance stands at $157 million–$166 million, compared to the $161.67 million consensus.

The company projects adjusted EBITDA loss in the range of $2 million to $7 million. Net loss is expected to be in the range of $8 million to $12 million.

For fiscal year 2026, the company projects adjusted EBITDA in the range of $48 million to $60 million. Lovesac reaffirms GAAP EPS guidance of $0.80–$1.36 vs. $1.03 estimate.

It also maintains sales outlook of $700 million–$750 million, in line with the $710.71 million consensus. Net income is expected to be in the range of $13 million to $22 million.

Price Action: LOVE shares are trading lower by 12.3% to $17.98 at last check Thursday.

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